1. Title: Support for International Development Research

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1 Ministry of Foreign Affairs TAS File no.: 104.C.110.b. Internal Grant Committee Meeting 2 April 2014 Agenda Item no.: 2 1. Title: Support for International Development Research 2. Partners: African Economic Research Consortium (AERC), and World Institute for Development Economics Research of the United Nations University () 3. Amount: 12.0 million DKK (AERC 10.0 million DKK; 2.0 million DKK) 4. Duration: AERC months; -12 months 5. Previous Grants: AERC million DKK (24 month) million DKK (12 month) Please see an overview of previous Grants at page 5 6. Strategies and policy priorities: 7. Danish National Budget account code: The Right to a Better Life. Strategy for Denmark s Development Cooperation, June 2012 Strategic Framework for Danish Support to Development Research (draft) Other International Development Research 8. Desk officer: Kurt Mørck Jensen 9. Head of Department: Tove Degnbol 10. Summary: The justifications for continued support to AERC and are: i) the Danish emphasis on development cooperation with Africa; and ii) support to AERC and reflects the priorities in the Strategic Framework for Danish Support to Development Research that emphasizes the concentration of support to fewer research organisations with key relevance. Both institutions are engaged in social science research in Africa (AERC) and throughout the world (). Results from previous support to AERC and have been useful for Danida policy formulation and specific Danida programming efforts in Africa in the areas of greener economic growth, sustainable development, climate change, employment generation and poverty reduction. There is a well-established working relationship between AERC and based on synergy and comparative advantage. Both AERC and have strengths in applied economic and policy research. While both organisations also have impressive regional and global networks, may have a comparative advantage in terms of intellectual capacity, global outreach and research uptake, whereas AERC based on its strong African network has demonstrated good

2 results in academic training and research workshops in Africa. 2 Objective and problem formulation: This supports The Africa Economic Research Consortium (AERC) and The World Institute for Development Economics Research of the United Nations University (). Both institutions are engaged in social science research benefitting developing countries. Danish support is now concentrated on fewer research institutions than before giving priority to regional institutions in Africa and institutions with considerable cooperation with African countries. AERC is a public not-for-profit organization. Its mission rests on two premises: i) that development is more likely to occur where there is sustained sound management of the economy; and ii) that such management is more likely to occur where there exists an active, well-informed group of locally based professional economists to conduct policy-relevant research. Hence, the mandate of AERC is threefold: i) enhancing the capacity of locally based researchers to conduct policy-relevant economic inquiry; ii) promoting retention of such capacity; and iii) encouraging its application in the policy context. undertakes multidisciplinary research and policy analysis on structural changes affecting the living conditions of the world s poorest people. s mandate also includes the promotion of capacity strengthening and training for scholars and government officials in the field of economic and social policy making. It places increasing emphasis on research uptake, to translate and package research findings in ways that can reach its three main audiences: national decision-makers in developing countries, international development partners, and global researchers. Project description: The strong Danish emphasis on development cooperation with Africa, economic growth, sustainable development, climate change, employment generation and poverty reduction is the main justification for the continued support to AERC and. AERC AERC is a major player in developing capacity to conduct economic research in Africa through formal higher education, training, network, competence development and applied research. The AERC research programme aims at improving the skills of local researchers while allowing for both regional and national economic policy research. The programme also fosters closer ties between researchers and policy makers. The AERC training programme supports both Master and PhD studies in economics. It helps to improve the capacity of departments of economics in universities across the continent. AERC s communications strategy encourages the application of research results to policy making. Dissemination of research results receives considerable attention. Over the decade, AERC has built a critical mass of research focusing on issues relevant for African development including s to poverty reduction strategy papers. Policy seminars provide a forum for the discussion of the policy relevance of the AERC research agenda. The number of researchers taking on policy advisory roles is increasing and serves as an indicator of success in research uptake. Internationally, the network is increasingly used as a policy sounding board by multilateral financial institutions and donors.

3 3 AERC s Masters and PhD programme are widely recognized and has a track record of positive reports from external examiners and high-grade achievements. The interaction between students from all over Africa paves the way for collaboration between participating universities, future policy makers and policy making institutions. Furthermore, the training programmes contribute to the regional retention of scarce capacity of teaching staff as professional opportunities for excellence have increased. s work programme for will produce high-quality, policy-relevant research on three overlapping themes for human development: i). Economic transformation, including reduction of poverty and inequality; ii) Social and economic inclusion; and iii) Environmental, social and economic dimensions of sustainability. These reflect major global and national challenges faced by developing countries, and the post-2015 agenda. Cutting across these themes, address three high-priority concerns: i) Africa s inclusive growth; ii) Gender equity; and iii) Aid effectiveness. The work programme presents a good case for how it will address key evidence gaps in the above research themes and cross-cutting concerns. These evidence gaps respond to demands from developing country policy-makers and researchers, including those represented on the Board, as well as wider consultation with the donor group. will continue its foundational research on poverty and inequality (along the lines of the Growth and Poverty Project and including the World Income Inequality Database). It will also identify new challenges in development economics and macroeconomics, in response to emerging areas of global interest, including the post-2015 agenda. The outcome of s work programme is uptake of high quality research by policy-makers and practitioners on economic and social policy issues affecting developing countries. Beneficiaries are policy-makers and practitioners in developed and developing countries, NGOs, and the academic community. These groups will benefit from improved access to knowledge of economic and social policy options. Improved knowledge is expected to strengthen public policy making in developing countries through use of stronger evidence. In turn, this should improve value for money for donor and tax payer resources, and allocation of those resources consistent with poverty reduction and economic development objectives. Developing country researchers will benefit from s capacity building activities and partnerships with the University of Ghana and African Economic Research Consortium. Previous results: AERC activities in 2013 included analytical and policy research on various economic issues in Africa. In addition, research workshops (117 researchers participating) as well as training under Collaborative Master Programme (59 students), the Collaborative Masters of Agricultural and Applied Economics (70 students), training at University of Pretoria (68 students), and 25 PhD fellowships were also undertaken. Numerous specific training courses have also been conducted within various theme of relevance for the mandate of AERC.

4 4 completed the ReCom programme in 2013 (Research and Communication on Foreign Aid, ). coordinated the ReCom programme in which the Danish Institute for International Studies (DIIS) also participated. AERC also contributed to some of the ReCom research results. ReCom was financed by Denmark (DKK 30 million) and Sweden (DKK 30 million). ReCom researched and communicated what works and what can be achieved through development focusing on growth and employment, governance and fragility, gender equality, environment and climate change and social sectors. The results of the programme are five major research reports covering these areas as well as a range of position papers, policy briefs, and articles in international journals. A number of conferences and seminars were also held during the programme period. In order to consolidate the ReCom results, not least dissemination and uptake, there is a need for further support to UNU- WIDER. Special considerations and priorities: A close working relationship has been established between AERC and (based on a Memorandum of Understanding), particularly during the tenure of the present Danish director for. The cooperation is based on both synergy and comparative advantages. AERC and have strengths in applied economic and policy research. While both organisations also have impressive networks, may have a comparative advantage in terms of intellectual capacity, global outreach and research uptake, whereas AERC based on its strong African network has demonstrated good results in academic training and research workshops in Africa. Both organisations are relevant partners for Denmark and for Danish priority countries in Africa. Budget and finance plan: The Danish will be core-funding to the annual budgets of AERC (DKK 80 million) and (DKK 38 million). AERC The annual budget of AERC is approx. USD 18 million. The annual Danish of DKK 5 million is an important core-funding for the organisation to secure that the key deliveries of AERC are maintained. Other core-funders are UK, Sweden, Norway, Government of Kenya, USAID, AfDB and the World Bank. AERC s annual work plan and budget is approved by its Board of Directors where Denmark is represented. AERC s current strategic plan lays out the basis for the annual work plans. The annual budget of s five year programme is USD 7 million. It was approved by its Board in June Danish core-funding will be pooled with funding from its other donors including Finland (USD 2 million/year), Sweden (USD 1 million/year) and the UK (USD 1 million/year). In addition, receives an annual income of about USD 2.5 million from yields on its Endowment Fund (s from India, Finland, Japan and Sweden). s annual spending profile reflects s from all donors and yields from the Endowment Fund. DK to AERC: 24 months (2014 and 2015) DKK 10 million

5 5 DK to : Total Danish : 12 months (2014) DKK 2 million DKK 12 million Previous Danish Grants to AERC and : Organisation AERC 4.2 mill 8 mill 5 mill 2 year 10 mill 2 year 10 mill 2 year 2 mill 1 mill 1 mill 2 mill 2 year 1 mill 2 mill Total 6.2 mill 9 mill 6 mill 2 mill 10 mill 1 mill 12 mill Significant risks: AERC There are no significant risks. However, the tendency to declining core funding and increasing ear-marked funding for AERC is a challenge as it affects the predictability of annual budgets and creates uncertainties for long term planning. AERC is aware of this development and gives a high priority to continue and increase the core-funding basis of the institution. There are no significant risks. However, it remains a challenge that research findings may be ignored by policy makers and therefore does not deliver policy implications. s strategy to address this is to engage both the policy and research community from the outset. Also, policy relevance will be a key selection criterion for all research projects undertaken.

6 6 Annex 1 - Partners: AERC The African Economic Research Consortium (AERC), established in 1988, is a public not-forprofit organization devoted to the advancement of economic policy research and training. AERC's mission is to strengthen local capacity for conducting independent, rigorous inquiry into the problems facing the management of economies in sub-saharan Africa. The number of staff in the AERC Secretariat is 35. Donor governments, private foundations, and African and international organizations support the AERC programme, which has two primary components: research and training. There is an increasing interest from African countries not just to utilize the AERC for training and education but also contributing financially to the network. The best representative for this trend is the Government of Kenya. On the policy front, senior policy seminars provide a forum for the discussion of policyoriented syntheses of AERC research and for obtaining feedback from policy makers on the AERC research agenda. Internationally, the network is increasingly used as a sounding board for major policy considerations by multilateral financial institutions and other donor agencies. The quality of the Collaborative Master's Programme is widely recognized; its history of very positive reports from external examiners and high-grade achievements in the courses formed part of the rationale for establishing the Collaborative PhD Programme. AERC has also embarked on building an electronic network among the universities participating in the collaborative PhD and MA programmes. This is aimed at facilitating information sharing and improved access to world resource centres. is one of the leading research institutes of the UN system and has a well established reputation within the international economics research community. It is held in high regard for the quality and challenging nature of its research and its intellectual independence. Its mission is to undertake multidisciplinary research and policy analysis on structural changes affecting the living conditions of the world s poorest people. s mandate also includes the promotion of capacity strengthening and training for scholars and government officials in the field of economic and social policy making. It places increasing emphasis on research uptake, to translate and package research findings in ways that can reach its three main audiences: national decision-makers in developing countries, international development partners, and global researchers. The current number of staff is 50. For the fourth year running was ranked in the top ten of international development think tanks according to the 2013 Global Go-To Think Tank Report. In 2014 ranked 7th in the highly competitive category of international development think tanks. has also achieved strong scores by annual DFID reviews. In June 2013, the UNU Council approved two potential funding scenarios for the 5 year work programme: i) a lower case USSD 7 million per annum budget scenario; and ii) a higher case USD 10 million per annum budget scenario. The business case of the present Appropriation

7 7 Note, and the communication with and co-funders, are based on the lower case USD 7 million per annum scenario which is consistent with the current donors likely funding commitments.

8 8 Annex 2 - Indicators: Selected AERC indicators for : 15 high end research publications 35 thematic research grants 15 research fellowships to institutions in the AERC network Increasing uptake on the Collaborative PhD Programme (presently around 20/year) Maintaining uptake on the Collaborative Master Programme CMAP (presently 59 students) Maintaining uptake on Collaborative Masters of Agricultural and Applied Economics (presently 70 students) 44 students in traineeship at the Ministry of Finance, Government of Kenya 15 grants for research on health care finance in Sub-Saharan Africa Analytical work in three countries on service delivery (with the World Bank) Two bi-annual research workshops (approx. 120 participants) Selected indicators for 2014: Three major cases of policy dialogue and changes in policy informed by research evidence Total number of publications funded outside of that are citing UNU- WIDER research and working papers 48 peer reviewed publications achieving 10 citations or more 223 published research outputs (all research findings placed in the public domain including working papers, policy briefs, journal articles and book chapters) 111 peer reviewed publications 6 research outputs are addressing gender issues explicitly 48% of contracted external researchers who are developing country nationals 28% of contracted external researchers from developing countries are women 112 published research outputs (co-)authored by developing country scholars 56 published research outputs (co)authored by developing country scholars with residency in a developing country 44 opinion pieces, 8 thematic interviews and 7 reports on the website 31 presentations delivered by researchers to a policy and practice audience downloads of Working Papers 7000 downloads of Policy and Research Briefs 5 policy uptake events (researchers and policy makers together) 4 reports on engagement with policy makers and practitioners within research activities

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